I know I am speaking to the converted here, and this is not news to SMEs, but in this election year, a campaign being run by the Australian Chamber of Commerce and Industry is trying to get government to seriously and properly focus on the needs of small business.
What business doesn’t want those things, but it’s just that SMEs are more dramatically affected by red tape and tax complications – they have less resources to deal with those problems.
The ACCI is running a “The BIG 4 You Can’t Ignore” campaign which targets the top 4 issues that small business has identified as critical to their survival and success in the lead up to, and following, the federal election.
The BIG 4 are:
1. Cut down on the RED TAPE e.g. make government administer the superannuation and paid parental leave payments systems; place sunset provisions on all business legislation and regulation.
2. Simplify the TAX SYSTEM e.g. reduce and then phase out payroll tax; restore quarterly company and income tax collection.
3. Make it easier to EMPLOY PEOPLE e.g. ensure that increases to superannuation costs for small business are offset with income tax or other cuts.
4. Build better INFRASTRUCTURE.
ACCI chief executive Peter Anderson says Federal Parliament simply must act on The BIG 4. However, he said the way Parliament and its committees engage with the private sector needs to change.
Anderson said one of the reasons “why we are at this point is a failure to have a critical mass of people in government or parliament who have private sector let alone small business experience”. He said the irony is, to get less government in small business, “we probably have to get more small business in government”.
Looking at the current House of Representatives, only 14 of the 150 members have been business owners, that’s 9.3%. Another 31 have had some experience in business, bringing the combined tally to around 45. That’s only 30%.
Thus, Anderson said, 70% of politicians deciding on laws that impact the private sector haven’t had any significant experience in the private sector. It’s not that everyone has to be a small business owner to have a wise head, but the imbalance is stark, he said.
“Fixing it is needed to structurally improve outcomes and the disconnect between our community and its Parliament.”
The burden the tax system imposes on SMEs has been well documented. It’s not a pleasant story.
That doesn’t mean the government of the day will cease imposing tax compliance obligations on small businesses. After all, they do have to pay their taxes. But it’s the way the system imposes itself on SMEs that is a major problem. The capital gains tax small business concessions are a perfect example. They are valuable concessions to SMEs but are exceptionally difficult to understand and put into practice.
We’re long overdue for governments to seriously take into account the effects on SMEs of the taxation, superannuation and related legislative regimes. Legislation introduced in Federal Parliament has to be accompanied by a compliance cost impact statement – that statement needs to carefully and in detail address the impacts on SMEs. It deserves input from the SME sector itself, not just Treasury.
Terry Hayes is the Editor-in-Chief of tax news reporting at Thomson Reuters, a leading Australian provider of tax, accounting and legal information solutions.